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Ethanol Fights Back
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Jane Wells is currently a CNBC business news reporter, based in Los Angeles, covering the defense and technology industries. Wells came from CNBC's “Upfront Tonight” where she was senior correspondeETHANOL FIGHTS BACK
Everyone is blaming ethanol for everything. Producers have gone from being heroes to zeroes. On Friday, I have three stories you can see here, showing what it's like to be in that industry now. Two years ago, corn was $2 a bushel and margins were $2 a gallon — and everyone and their brother wanted in.
Now corn is $6 and margins are 10 cents — or negative, for some operators.
The ethanol industry's defense is this: Don't blame us for $125 oil. They say ethanol is actually making gasoline cheaper (it's also subsidized by more than 50 cents a gallon).
And the industry claims ethanol's corn needs are only responsible for 2-3 percent of food inflation. You can't blame rice and wheat prices on ethanol. (Well, maybe some wheat, as farmers switched to corn.)
One of the more compelling arguments I heard was against lifting the tariff against cheaper Brazilian ethanol. Brian Sherbacow, former COO of the now-bankrupt Ethanex, says that would only make us dependent on yet another foreign country for energy, which would defeat the whole purpose of our national investment in homegrown biofuels.
(Contd.)
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Ethanol Players:
Pacific Ethanol [PEIX
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Verasun Energy [VSE
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Archer-Daniels-Midland [ADM
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Make no mistake, while corn sits in the silos, ethanol producers feel they're sitting in missile silos, as everyone from environmentalists to Big Oil to non-corn farmers to angry consumers launch verbal attacks. What a difference two years makes.
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